Weak Demand Leads to Narrow Fluctuations in the Melamine Market in China

October 22, news

Recently, the overall Chinese melamine market has shown a pattern of narrow fluctuation under the imbalance of supply and demand. The interweaving of bullish and bearish factors has led to a lack of clear direction in prices, causing them to fluctuate within a narrow range.

Market prices are generally at their lowest levels in a year. For instance, as of October 22, the benchmark price stood at 5,512.50 CNY per ton, still down 0.68% compared to the beginning of this month. Meanwhile, factory prices for the atmospheric-pressure process typically range between 4,900 and 5,250 CNY per ton.

1. Short-term local benefit:

Supply-side occasional contractions: For example, the Sichuan Meifeng facility (with a capacity of 50,000 tons) was shut down on October 21, leading to a slight increase in its ex-factory price by 100 CNY/ton, to 5,200 CNY/ton. Such planned or temporary maintenance by individual companies can provide short-term support to supply and market sentiment in specific regions.

2. Long-term fundamental bearish factors:

Downstream demand continues to be weak: The main downstream sector for melamine (about 60%) is the building materials industry, such as artificial boards, which are closely related to the real estate sector. Currently, the real estate sector in China is experiencing low prosperity, directly suppressing the actual demand for melamine. This is evidenced by Anhui Jinhe Industrial Co., Ltd.'s move on October 22 to lower the factory price by 150 CNY per ton to 5,400 CNY per ton, reflecting the sales pressure faced by manufacturers and the strong bargaining power of downstream customers.

Cost support weakens: The price of urea, the primary raw material, declined quarter-on-quarter in the third quarter of 2025. As of October 22, the benchmark urea price stood at 1,570.00 CNY per ton, a 3.16% drop compared to the beginning of this month (1,621.25 CNY/ton). This lack of cost-side support is failing to provide mica manufacturers with a solid and effective foundation, further squeezing profit margins for melamine producers.

Overall, the current melamine market is experiencing narrow fluctuations. The local benefits brought by plant shutdowns are not enough to offset the fundamental negative impacts of long-term overcapacity and weak demand in China.